The AT&Terminator: Rise of Ma Bell

To hear tell from AT&T, the company’s proposed $39 billion purchase of T-Mobile USA is a boon for
Americans and their country. Sure, it removes an innovative, low-cost carrier from the wireless market and leaves America with essentially three big wireless-telecoms. Sure, it raises the prospect of higher rates and fewer choices for consumers. But it will speed and broaden AT&T’s deployment of next-generation 4G wireless service. And it’s a victory for America. As AT&T observed in its press release announcing the acquisition, the deal “makes T-Mobile USA, currently a German-owned US telecom network, part of a US-based company.”

Such morally admirable altruism and patriotism. But few, it seems, are buying it. On Sunday afternoon Sen. John Rockefeller (D-W.Va.), chairman of the Commerce Committee, urged “both the Department of Justice and the FCC leave no stone unturned in determining what the impact of this combination is on the American people.” A few hours later, Sen. Herb Kohl (D-Wisc.), chairman of the Senate Antitrust, Competition Policy and Consumer Rights Subcommittee, promised a hearing on the deal. “The explosion of cell phone usage – especially smartphones – makes competition in this market more important than ever as a check on prices, consumer choice, and service,” Kohl said in a statement. “That’s why the Antitrust Subcommittee will take a close look at what this loss of competition will mean for people who increasingly rely on wireless phone service to connect to friends, family and the Internet.”

Consumer groups echoed those concerns, with Public Knowledge president Gigi Sohn calling the combination of America’s second-largest wireless carrier with the fourth-largest “unthinkable” and Bert Foer, president of the American Antitrust Institute, reminding us of AT&T’s monopolistic past. “AT&T was broken up and now it’s back with a vengeance,” he said. “We have to decide if we’re happy with the idea of going back to monopolistic treatment of the telecom industry. AT&T has come back to monopolistic power just like the Terminator.”

A colorful analogy and one which I’m sure will irk AT&T to no end. But Foer’s point is well taken. The wireless business is becoming more concentrated; the Federal Communications Commission said as much in its last Mobile Wireless Competition report. “One widely-used measure of industry concentration indicates that concentration has increased 32 percent since 2003 and 6.5 percent in the most recent year for which data is available,” the agency concluded.

Thing is, the FCC didn’t say that there wasn’t effective competition in the market. Which is perhaps why AT&T seems so confident it will get regulatory approval for the deal. “This is probably the most fiercely competitive wireless market in the world,” AT&T CEO Randall Stephenson told The Wall Street Journal. “The majority of Americans have the option of five different wireless carriers.”

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